With AI on the horizon to enable the optimization of retirement income plan choices, the retirement fortunes of retirees are about to improve.
Once, there were only your stock and bond portfolios, mutual funds or ETFs as options for your retirement savings. You and your adviser managed retirement risk through asset allocation and pretty much ignored which accounts you were invested in and how much in taxes you paid.
When it came to post-retirement, your adviser used “de-accumulation” software that did Monte Carlo simulations of market performance, as I described in my article Don’t Bet Your Retirement on Monte Carlo Models. The model gave you a probability that your retirement savings would last to a specific age. If you wanted to reduce the risk of running out of money during retirement, you were told to set a lower income goal and accept a reduced lifestyle. Experts find fault with this “gambling” with your future, along with other issues in current planning practices and assumptions I have addressed in previous articles, such as:
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